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Guiding Principles for Designing an Extended Enterprise
Source: IDC |
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Carefully consider these principles and
augment as necessary with organization unique requirements
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Review current extended enterprise operation against these principles,
identifying gaps or conflicts
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Involve other parties in the extended enterprise during these
discussions and considerations
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Consult widely with IT vendors, systems integrators and preferred
consulting firms when establishing extended
enterprise strategies and implementation approaches
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Develop plans along with partner organizations to resolve gaps and
conflicts
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Ensure that the principles become part of the ongoing management and
strategic planning
processes
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What Is Extended Enterprise?
The term "extended enterprise" represents a new
concept that a company is made up not just of its employees, its board
members, and executives, but also its business partners, its suppliers, and
its
customers.
The notion of
extended enterprise includes many different arrangements such as
virtual integration,
outsourcing, distribution agreements, collaborative
marketing, R&D program partnerships,
alliances, joint ventures, preferred
suppliers, and customer
partnership.
Why Extended Enterprise?
Previously
organizations have been thought of as linear entities, each with a linear
value chain that consisted of all the
activities required to design,
market,
sell,
produce, deliver and support products and services. Suppliers and customers
were thought to be "outside" the organization's domain. And the organization
was depicted as a hierarchy of reporting relationships, primarily
functionally aligned. Such depiction implied a command and control approach
to actions, decision-making and information.1
The new economy,
with high-tech companies rapidly evolving and "old economy" enterprises
embracing new ideas, brought tangible reality and urgency to new
organizational forms.
With
globalization of markets, productivity pressures, scarce resources,
intensifying competition, blurred industry boundaries and rapid technology
change, new relationships and structures have emerged in all sectors of the
economy. Modern
organizations create new ways of delivering
value to customers,
new approaches to
collaborating with suppliers along with critical thinking about
organizational structure and purpose.
Co-evolving With Customers
and Suppliers
In the new world of
business ecosystems, you must learn
how to get other players, especially your customers and suppliers, to
co-evolve with your
vision
of the future. To be able to do so, you must let go of centralized control,
establish an
adaptive flat organization, and
empower your employees and
business units.
The Role of Information
Technology
The extended enterprise can only be successful
if all of the component groups and individuals have the information they
need in order to do business effectively. Extended enterprise applications,
or applications that span company boundaries, include a web of relationships
between a company and its employees, managers, partners, customers,
suppliers, and markets.
Technology
plays a strategic role in the extended enterprise – in some cases driving
the opportunity for change and in others facilitating collaborative
relationships and inter-organizational operation.
IT enables the openness, immediacy, information sharing, flexibility and
adaptability that the extended enterprise demands. Information technology
also enables customer responsiveness,
speedy decision making, superb inventory control and greater visibility
across the extended organization for demand planning. The IT vendor
community is ideally positioned to assist with
technology strategy and deployment for
the extended enterprise.1
The extended enterprise is an intricate,
interconnected network of information, and you need true enterprise-strength
solutions to tie all these together.
Planning for an Extended
Enterprise?
In a world populated by value creating and
value exchanging entities, often the decision will come down to owning one
of three fundamental value propositions. You will either be able to own the
customer, own the content that the customer seeks to acquire, or own the
infrastructure that allows the content to be produced or the value to be
exchanged. Each has a different
business
model. Each
exploits a unique core
competence. Each employs a different means of generating economic
returns. However, in the connected economy, attempting to own all of them
simultaneously will increasingly become a game of diminishing returns. When
the network allows competitors to fill the gaps in their offerings at no
additional cost, owning all of these competencies only increases risk
without necessarily increasing returns.2
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